Top Crypto News – 29/11/2017

Elon Musk: I Am Not Bitcoin Inventor Satoshi Nakamoto

The debate on the identity of Satoshi Nakamoto promises to be a never-ending one. After a former SpaceX intern blogged that Elon Musk is probably Satoshi, Musk clarified that he is in fact not the creator of Bitcoin.

Rumour mills start rolling

People have speculated about Satoshi’s origins ever since Bitcoin was invented. The trigger to get the rumour mills rolling this time was a blog post by Sahil Gupta, former intern at SpaceX, who blogged that Elon Musk was probably Satoshi Nakamoto. Sahil uses Elon Musk’s background in Economics, experience in production level software and history of innovation to speculate that Elon Musk ‘probably’ invented Bitcoin. Given the divisive nature of the blocksize debate in the Bitcoin community, Sahil sought Elon’s (or Satoshi’s) intervention and asks him to play the role of a founding father (similar to Vitalik Buterin in Ethereum).

Outright denial

Elon Musk, has however, denied that he was Satoshi Nakamoto and going on to add that he had lost the Bitcoins which were sent to him a few years back.

Elon Musk tweeted

There has been chatter on social media in the past about whether Elon Musk could be Satoshi, but nothing ever came of the talk. Musk’s earlier stated views on Bitcoin were not flattering. In an earlier interview, Elon Musk had said:

“I guess it is primarily going to be a means of doing illegal transactions. That is not necessarily entirely bad. Maybe some things shouldn’t be illegal…. You should have a legal to illegal bridge.”

The Nakamoto and Craig Wright fiascos

Previous hunts for Satoshi Nakamoto have not ended well. Craig Wright claimed in 2016 that he was Satoshi and managed to convince a few mainstream media organizations and Bitcoin developer Gavin Andresen, before his claim was debunked.

In 2014, Newsweek’s cover story claimed that the magazine had uncovered the identity of Satoshi. They speculated that an engineer named Dorian Nakamoto was actually the creator of Bitcoin. A media frenzy followed, despite Dorian Nakamoto’s repeated denials that he wasn’t Satoshi. Eventually the Newsweek story was debunked, the magazine was left with egg on its face and Dorian Nakamoto’s life was turned completely upside down, bringing great financial hardship to the man.

Various people from Hal Finney to Nick Szabo were thought to have been Satoshi at various points in time, but nobody knows for sure. Many still believe that Satoshi is actually a group of people rather than a single individual.

Does it really matter?

While Bitcoin has grown organically and drawn millions of users into its fold without the active involvement of Satoshi, questions will always remain about his identity. Nonetheless, the development of the Bitcoin protocol has proceeded apace without Satoshi, given the talented developers who work on Bitcoin and significant community support.

However, if Satoshi is still alive and if he still holds his private keys, he is believed to own about one million Bitcoins. With Bitcoin having just breached the $10,000 level, that gives Satoshi a net worth, on paper, of $10 bln. Given that many believe Satoshi no longer has control over the coins, if he ever decided to sell his Bitcoins, the price of Bitcoins might plunge.

Given that Satoshi has remained out of the limelight for so long, it does seem likely that he values his privacy more than the billions that his Bitcoins are worth. Then again, with Bitcoin’s epic bull run, nobody knows at what point the mysterious founder might change his mind.

Written by CoinTelegraph

A few years ago, that comment by Murray Stahl, chairman and CEO of asset manager Horizon Kinetics, would have been so typical for a cryptocurrency conference as to escape notice. But at CoinDesk’s Consensus: Invest event on Tuesday in New York, Stahl’s credit-wary sentiment stood out as an outlier.

Instead, “leverage,” “lending,” “margin trading” and “credit” were painted as elements of the market that need to be further developed (along with better custody services) in order for the nascent crypto asset industry to flourish – not sins of the legacy financial system to avoid repeating.

Call it a sign of selling out, an early warning of systemic risk or simply an indicator that the cryptocurrency world is maturing. Either way, the arrival of institutional and high-net-worth investors in the space has created openings for services similar to the prime brokerage that financial institutions have long provided to hedge funds, several speakers said.

“There is a strong demand for leverage in the space,” said Adam White, a vice president at Coinbase and general manager of GDAX, its digital asset trading platform.

To meet that demand, GDAX hopes to reintroduce a margin service that it put on “pause” earlier this year, White said during a morning panel discussion. (He didn’t say why the service was suspended, but it apparently happened sometime after the ether “flash crash” this summer.)

Trade-offs

But the desire of traders to amplify returns with leverage is not the only reason some see a need for more lending in this market.

Rather, some provision of credit on an intraday basis and post-trade settlement is inescapable even when assets are settled on a blockchain, said Max Boonen, CEO of B2C2, an electronic market making firm based in London.

During his morning presentation, Boone challenged one of the long-touted selling points of blockchains: the instant settlement of trades.

He told the 1,300-strong crowd:

“Could settlement become faster? Yes. Could settlement become instant? Absolutely not, and nor should it be.”

For one thing, the block size debate in bitcoin has underscored that there is a “trade-off between the speed of settlement and the resilience of the payments infrastructure,” he said. “The more transactions you push through the network, the more brittle it can become.”

Moreover, gross settlement – a pre-blockchain term for trades that are settled as soon as they are processed – “imposes a lot of pressure on the balance sheets of market participants,” said Boonen.

For example, he told the audience, “if I buy $1 million of Treasuries in the morning, and I sell my Treasuries in the afternoon, I need to maintain at all times that $1 million on my balance sheet.”

On the other hand, net settlement (the type of system that real-time gross settlement and later blockchains were supposed to replace) allows for a more efficient use of balance sheets – but requires intraday credit, he said.

Credit creeps in

Echoing these speakers, Dan Matuszewski, the head of trading at Circle Internet Financial, said during a morning panel that there is a “real strong need” for the ability to borrow in this market.

It would not only facilitate short positions but also provide working capital for trading desks to make markets, he said.

During his talk, Boonen of B2C2 acknowledged the irony of the situation given that bitcoin was born as a reaction to the 2008 credit crisis.

“Bitcoin enthusiasts really, really do not like credit,” he said. But, he added, “for better or for worse, credit is an important part of a functioning and liquid financial market.”

Even before the institutional money started flowing in, he noted, “by necessity, credit did creep back into bitcoin and crypto markets in general,” with the major exchanges offering leverage to the early retail investors.

The “beauty” of cryptocurrency is that trusted third parties are not required to simply transfer funds between wallets, Boonen said. But for now, he added, they are needed for the more complex business of trading crypto assets, “to a much greater extent than in the mainstream financial markets.”

Photo via Michael del Castillo.Written by CoinDesk

Bitcoin is an Economic Miracle: Cambridge Professor

Dr. Garrick Hileman, an economic historian at the University of Cambridge and the London School of Economics, explained in an interview with CNN that Bitcoin is nothing short of an economic miracle.

Hileman stated:

“Many economists dismissed it as a flawed form of money, something that could never achieve the level of adoption that it has. Today we estimate 5 to 10 million unique active users of cryptocurrencies, and in my opinion that’s nothing short of a minor economic miracle.”

What Bitcoin represents

Bitcoin is the world’s first form of decentralized money; a store of value that is censorship-resistant and that is immutable against manipulation by central entities, authorities and governments.

The decentralized structure and peer-to-peer protocol of Bitcoin are unique in that they allow the Bitcoin network to operate as its own economy, without intermediaries and third party service providers. While some central banks and financial institutions have begun to fear such aspects of Bitcoin, the Bank of Finland encouraged economists to study the “marvelous structure” of Bitcoin.

In a paper entitled “Monopoly without a monopolist: An economic analysis of the Bitcoin payment system,” Bank of Finland researchers wrote:

“Bitcoin is not regulated. It cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts. Bitcoin’s design as an economic system is revolutionary and therefore would merit an economist’s attention and scrutiny even if it had not been functional. Its apparent functionality and usefulness should further encourage economists to study this marvelous structure.”

Global impact

As mentioned above, Hileman described Bitcoin as an economic miracle, but a “minor” one. However, at this stage in which the market valuation of Bitcoin has surpassed that of major banks at $166 bln and the liquidity of Bitcoin is higher than that of most stock markets, it is difficult to justify any aspect of Bitcoin as “minor.”

Bitcoin has had a major impact on the global financial system over the past eleven months, and it will continue to transform the finance industry at a rapid pace. Already, institutional investors have begun to move into the Bitcoin market. Coinbase CEO Brian Armstrong revealed that approximately $10 bln in institutional money are awaiting to be invested in digital currencies such as Bitcoin.

“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds, and more). By some estimates there is $10 bln of institutional money waiting on the sidelines to invest in digital currency today,” wrote Armstrong.

Economic miracle

Naturally, as major hedge funds and large-scale investment banks shift towards Bitcoin, general consumers and casual investors will follow. Then, Bitcoin will no longer be a minor economic miracle but a major one, which will inevitably shape the finance sector in the long-term.

Leading economies like the US, Japan and South Korea have already recognized Bitcoin as a legal currency and store of value, providing regulations to cryptocurrency exchanges, businesses and investors.

As a currency, Hileman also noted that Bitcoin is increasingly being used in the luxury markets, to process or settle large transactions without the expensive and inefficient services of banks.

“If you’re only paying a $2 transaction fee on a piece of art that’s worth tens of thousands, the fee is basically zero. But if you’re paying two or three percent on a piece of art of that value, then the numbers can go up quite a bit,” added Hileman.

Written by CoinTelegraph

The First DPOS Lightning Bitcoin Hard Fork is on the Way

After Bitcoin Gold, Bitcoin Diamond and Super Bitcoin, another forked-coin Lightning Bitcoin is coming on the way. Initiated by an European team, Lightning, the project will become the first forked-coin that adopts the DPOS consensus mechanism.

Fork at Block 499,999

The new project Lightning Bitcoin (LBTC) will fork at block 499,999 on or around December 23, 2017. Why lightning? The team aims to make Bitcoin transfers as fast as lightning, or at a maximum of 24 million transactions a day. How can that happen? The answer is the DPOS mechanism, according to the project’s proponents.

The POW mechanism has long been discussed as the cause of mining centralization and network congestion. Daniel Larimer, author of Delegated Proof-of-Stake Whitepaper explained that miner tycoons control block time to maximize their interests, which will ultimately along with all POW systems be controlled by the fiat system. As such, the Lightning team employs DPOS mechanism that gives voting rights to token holders to avoid control of the system by any party. According to its official website,

The DPOS consensus will significantly reduce the number of participating verification nodes and help LBTC reach consensus in seconds and boost the transaction speed to really be as FAST as lightning.

Who is Behind the Project?

Jack Zhang

The project hasn’t revealed its development team today, except for the Chinese community leader “Jack Zhang”. But on its website we can see that they already got support from exchanges CEX.io, BTCC, gate.io and Coldlar wallet.

The Initial Coin Offering Craze

Since Bitcoin Cash came out, Initial Fork Offerings have become a trendy way for new blockchain projects to receive funding. Now we have witnessed the success of Bitcoin Gold(BTG) and Bitcoin Diamond(BCD). Despite concerns about its security problems, BTG ranks in the top 5 for market cap. And the newcomer BCD has been listed at over 30 exchanges worldwide. With these successful examples, there will be more projects bearing the name of Bitcoin to save listing and advertising fees.

Will the Initial Coin and Fork Offerings evolve to Infinite Offerings? How will it impact Bitcoin? Leave your thoughts on the comments section below.

Images courtesy via Shutterstock and Lightning Bitcoin
Written by CoinDesk